March home sales down as prices rise

A "Sold" sign is posted outside a home in Indianapolis, Ind., on April 9. Total existing home sales nationwide declined 0.6 percent to a seasonally adjusted annual rate of 4.92 million in March from a downwardly revised 4.95 million in February.

A low supply of homes for sale took a bite out of existing home sales in March while prices continued to climb, the National Association of Realtors says.

Total existing home sales declined 0.6% to a seasonally adjusted annual rate of 4.92 million in March from a downwardly revised 4.95 million in February, the Realtors reported Monday.

Wall Street had been expecting sales to rise in the month, and the miss is a sign that it's been "overestimating the strength on the housing market recovery," says Steven Ricchiuto, chief economist for Mizuho Securities.

Sales were 10.3% above last year's pace in March.

Despite the month-over-month drop in sales, there were more signs of a market recovery, says Jed Kolko, chief economist of real estate website Trulia.

For the second month in a row, inventory was up slightly. Also, the March drop in sales came from a shift of distressed home sales to more conventional sales. They were up 23% year-over-year. Increased sales of properties that aren't either foreclosures or short sales is a sign of a market in recovery, Kolko says.

Inventory, though expanding, is still tight, says Lawrence Yun, NAR chief economist. As a result, homes are selling fast and multiple bidding is more common. In March, the typical home sold was on the market for one month less than a year ago.

Listed inventory was almost 17% below a year ago. At the current pace of sales, the nation has a 4.7-month supply of homes for sale.

"Conditions continue to broadly favor sellers," Yun says.

Home construction is not rapid or large enough to bring the supply of homes for sale more in line with traditional norms. Realtors generally say a 6-month supply makes a balance between buyers and sellers.

The national median existing-home price for all housing types was $184,300 in March, which is 11.8% higher than a year ago.

Median prices can vary widely depending on the type of homes that are sold. Fewer sales of distressed properties can result in big upward gains in median prices. The March increase is the strongest in more than seven years. Prices have been up year-over-year for 13 consecutive months, NAR says.

Distressed homes - foreclosures and short sales - accounted for 21% of March sales. That was down from 29% a year ago. Foreclosures sold for an average discount of 15% below market value.

All-cash sales were 30% of transactions in March, down from 32% a year ago. Individual investors, who account for most cash sales, bought 19% of homes in March, down from 21% a year ago.

Single-family home sales slipped 0.2% to a seasonally adjusted annual rate of 4.32 million in March from 4.33 million in February.

Tight supplies are especially affecting sales volumes in markets that have tended to lead the home market recovery.

In California, March sales of single-family homes fell almost 5% year-over-year, the California Association of Realtors says.

The association blames low inventories of homes for sale. In that state, the inventory fell in March to a 2.9-month level, meaning they'd all sell in 2.9 months if no more supply came on the market.